An early investment pays off big for Medicaid

A new study shows making sure all kids have access to health coverage is a better investment for states than most opponents would have you believe.

Using tax filings from low-income families with children who were eligible for the Children’s Health Insurance Program (CHIP), a Yale economist examined the taxes paid by these children once they became adults.

The data showed people who had been eligible for Medicaid as children, as a group, earned higher wages and contributed more in federal taxes than their peers who were not eligible for the federal-state health insurance program. And the more years they were eligible for the program, the larger the difference in earnings.

The longer these people were eligible for Medicaid as kids also corresponded with reduced amounts they received in Earned Income Tax Credits – a tax refund for low and middle-income earners.

“If we examine kids that were eligible for different amounts of Medicaid over the course of their childhood, we see that the ones that were eligible for more Medicaid ended up paying more taxes through income and payroll taxes later in life,” Amanda Kowalski, an assistant professor of economics at Yale and one of the study’s authors, told The New York Times.

This shows early access to Medicaid makes kids less likely to need public benefits later in life and increases their contributions to the tax base. It’s a classic example of how an early investment in our young people can lead to a big payoff for society down the road.